Why Your Pitch Gets Ignored

Jake Aaron Villarreal: I'm Jake Aaron Villarreal, born and raised in Silicon Valley, and here to take you behind the scenes to share what it's like to be a startup founder, the journey they're on, the problems they face, the products they build in an effort to make our lives better. I'm excited to have with us today Susan Liu, partner at Uncork. Susan, you're a different guest because it's not building a platform. It's actually helping those startups grow, build, and scale. So excited to get your perspective on what you're seeing in the market and more importantly how others can learn from you in terms of what they should be preparing for when they go in and ask for that seed round or ask for that capital, or more importantly just what should they know that they don't know today. Before we do that though, where are you joining us from today?

Susan Liu: I'm in San Francisco.

Jake Aaron Villarreal: Very cool. I love that town. I lived there for a few years and it's one of my favorite places. So you're in a good spot. For the listeners, a little bit more on Susan's background. Susan is a seed investor at Uncork Capital. She has spent a decade investing in B2B startups and is especially excited about founders using AI to reimagine legacy markets. She goes deep in her due diligence. She loves spending time with potential buyers of the product to understand their workflows, pain points, and market dynamics. Before joining Uncork in 2021, she was a software investor at Scale Venture Partners, having partnered with dozens of Series A and B startups. Susan knows what it takes for seed-stage companies to reach the next milestone. At Uncork, Susan has backed companies like Numeral, which is automated sales tax for CPA and software businesses, and IVO or EVO, an AI-powered contract review platform built for in-house legal teams. She has been named to the Forbes 30 Under 30 list and honored with a Rising Star Award by the NVCA. She graduated from UC Berkeley with a degree in economics. Susan, you got a great background and the transition from where you began to where you are today is a great story. I guess before we jump in, talk a little bit about kind of your early experiences that shaped you into where you started and kind of how did you get into the space you're in today on the venture side?

Susan Liu: Sure. So, in terms of how I got in, so it was very unexpected, I would say. I have a partner, Trip, who has known he's wanted to be a VC since he was like 8 years old. And for me, it was, you know, that was not my game plan. Meaning, like growing up, both my parents were immigrants. I didn't quite know what I wanted to do. So, I'd say like I accidentally fell into venture. I started my career doing tech investment banking. And while I realized quickly banking wasn't for me, I realized that I really loved technology companies, especially early stage ones because they were just ever-changing, very innovative, always doing super cool things, and I knew I wanted to get involved in the space. So, when I was thinking about next steps in terms of what I wanted to do with my career, um, I knew I wanted to work with tech companies.

And so I started interviewing around and luckily I landed a role as an associate at Scale, which is where I started my career. And you know going in I didn't really know that much but like you know the more you do the job the more you learn and the more I did the job the more I loved it. And in particular, again, like I just loved like the constant innovation that happens with these early stage companies. I really love partnering with founders and I think like for me like the ultimate high was just like when you invest in the right company and they really change their market and they grow really quickly and like you can just kind of see the momentum. It's very exciting and I'd say like that component is kind of what keeps me going in venture is like I just love like the whole act of finding the right company because when it works it's super exciting and it's really fun to be on that journey with founders.

Jake Aaron Villarreal: Yeah. Well, it's a space that has gotten a lot of publicity in terms of where companies start and how they got their funding and really who was behind investing in them. And you know your company, is it specifically focused around seed funding for companies?

Susan Liu: Focused on seed funding. Yes. And I would say like seed funding these days is pretty broad. So for us, we're investing out of a $225 million fund. Check size for us is, I would say like anywhere between 1 to 5 million. Average first check is probably two to four million. And with this capital, we can invest in pre-seed, which is like when you're just coming up with an idea, forming a team, and getting a product in market. We can also do what I call classic seed, which is when you have a product in market, um, and then a couple of initial customers to kind of vet that idea. And we can also do seed plus as well, which is it's kind of in between seed and series A, which is typically you do have a product in market. You're probably further along in terms of traction, but you're not quite there at like the Series A milestones. Um, and so you need like an additional, I don't know, anywhere from like, I would say like probably like two to like six to seven million to kind of get to the next stage and get to the series A.

Jake Aaron Villarreal: Yeah. Along that journey. Well, just like someone joining a company, whether you're on the engineering side for a startup or maybe building a company and trying to find the right people, what was it that you saw at Uncork that you felt like it was a good fit for you? Because when we look at the portfolio and their background going back to 2008, 2009ish, there were some really good companies that they've invested in that had great exits, good history there. For you, what was it that attracted you to that organization?

Susan Liu: Yeah, I mean that definitely is a component of it. Meaning like Uncork has a really good reputation in terms of finding the best founders and companies to back. And I think that track record is very important because in order to raise the next fund, you have to demonstrate that you can do that successfully. So that part was very important for me. I wanted to go to a platform where we had a track record of success. In addition to that, like when you're, like seed stage is very competitive and like something that founders care a lot about is like they want to work with investors that have backed like good companies in the past because like they want the best investors on their side and they want the investors who've worked with companies to kind of achieve that success. Um, and so it's also really important to me to have like a really good portfolio that I can reference.

And of course, like with any job, like you want to like the people that you work with. And so I spent a lot of time with the rest of the team to kind of get to know them. And um I just really like the dynamics that we had. I thought they were really good people. And I also did a bunch of references on the team as well just to make sure like um they were good people. I spoke to other VCs, other founders in the portfolio, and everybody just had really great things to say. The things that were consistent was like, "Hey, like these people are straight shooters, but they always have your back," which I love. And also it's very important at the early stages because as you build a company it's definitely a journey, meaning like it has its ups and downs. It's never perfect and you just need somebody on your side who will be there even for like the tough parts of building a business. And I'd say like that component was really consistent in the feedback that I got from the market when I was doing diligence on the team. So I think it's a combination of just great track record, great reputation, and then just good people.

Jake Aaron Villarreal: Yeah. Well, some of the brand names that I saw that I recognized and have friends that work at these companies were SendGrid was one great company. You know, you look at a company like ClassDojo, uh other organizations like Postmates, like, you know, acquired by Uber. Like, these are pretty big brands that have gone somewhere that people would recognize, but there's other companies too that maybe haven't quite got there yet, and we'll talk maybe about some of the companies you've personally been involved with of your experience in, you know, seeing the founder and investing with them. Uh, but one of the things I want to help other founders on this podcast understand is, you know, there is some process to getting feedback and getting funded and being part of the journey with a firm that can really help them. Uh and part of that I think is going through that experience and knowing what to do and what not to do which is doesn't... I mean you could read, you could chat and you can get like the fundamentals or whether you come out of Y Combinator or Techstars and you have a framework. But coming from the VC side of the desk, like you see things all the time that, you know, others aren't going to see yes on the other side of the desk.

So, I want to start off with like from your perspective with people coming in the door and sitting down with you today. It usually starts with an email or a message and sometimes they land, sometimes they don't. So, like what are some of the things you want to share that would be helpful for a first-time founder out there trying to get a foot in the door? Some of the checklists I should be thinking about?

Susan Liu: Yeah, good question. So, I'd say as a seed stage investor, each partner sees thousands of deals a year, meaning like they get thousands of companies inbounding to them a year, which is quite a few.

Jake Aaron Villarreal: Yes.

Susan Liu: Um, so I say like in terms of how to actually get our attention, there's a couple of things founders could do. One would be if you can find a warm intro. And I think most founders will tell you that like people are surprisingly helpful. Meaning like even if it's a connection where like you knew this person from high school but you see that they're connected to one of us, like that person will most likely help you. People are just generally very helpful. So if you can I would get a warm intro and I know it's not always possible.

So if it's not possible and you know you think the best way is just to send a cold email I'd say there's a few things you should do. One is, and I guess this is also true like if you're getting a warm intro as well. One is do some research on the partner. We try to make it really clear what kind of companies we like just like via our bios or like even from things like podcasts etc. We talk about what we like and what we want to invest in. Do that research, figure out what they're spending time in, and if you fit within an area of interest for them like definitely reach out to that specific partner. And the reason why this matters is because usually what happens is if you get intro'd to a specific partner, like you may not get passed on to someone else.

So for example like and also like if that partner spends time in that space they have a prepared mind. So, like they can see the value of the company pretty quickly versus if it's somebody that doesn't quite understand the space. Like it takes time for them to ramp and everyone's super busy, there's a chance they might pass just because they don't understand your value prop and you definitely don't want that. Um, so I do think it's really important that like you reach out to the right partner. Um, and that just that basically is just doing some online research to kind of figure out what they're interested in because most of us make it pretty clear like what we like and what we don't like.

Um, the other way you can kind of figure that out is by just looking at their past investments. Um, like for example, you can kind of tell like I like legacy markets just by looking at my prior investments. Like I invested in a company that is um doing like sales tax and that's like a very old, old market that is big, but like you know there are a lot of incumbents in the space and really like no next generation until very recently. And in addition to that like I also like vertical software as well because I've invested in a couple of vertical software businesses and so you can kind of tell from like our history of investments like what sort of companies we're into. So that should also help inform um uh your thought process in terms of like who to reach out to.

So again, warm intro is best, but if you can and you have to do a cold email, I think that's totally okay. I would say personally I prefer just like a direct email versus a LinkedIn message. I get a lot of LinkedIn messages. I would admit like I don't, I'm not as good at following up on LinkedIn versus like my work email. So I think your odds of like getting us to like maybe like take a meeting might be higher if you were to send us an email directly on our work email.

And then there's also an art in terms of crafting this email as well. So, as you can imagine, we get tons of inbound, like tons of inbound emails. And the emails that stand out to me, um, they do a few things. One, they kind of know our area of interest. Like, again, I think that's very important. Meaning, they're like, you can say things like, "Hey, like I saw you invested in a sales tax company. We're also pursuing something else within the finance stack. We're doing XYZ." Like, that will probably get my attention. Or if you like personalize it somehow. So, for example, if you read my bio, you'll know that I have two dogs. If you like mention something about dogs, like I don't know, something like that, like that could also potentially catch our attention.

But aside from that, I'd say like typically in terms of like a cold email, you want to include a couple things. One, like within the body of the email, you want to describe the company in a very concise way, but also like descriptive enough where we understand what you're doing. In addition to that, if there's anything that stands out with the company, you should mention it. So whether it's, "Hey, like I just signed like five big contracts and they're like huge six-figure deals," put that into the body of the email. Um, again, we're busy people. These emails don't have to be long, but like whatever you put in the body of the email, make sure it counts. So, like highlight the best parts of the company. Or like perhaps like, you know, you you're a founder with a great background. You're building in the construction space and like you've like started a construction company in the past, so you have great founder-market fit. Like if that is the case, mention that. So, with every company, there's always something um that stands out for the company, and I would make sure to highlight that.

Jake Aaron Villarreal: Yeah. Really cool. You know, we've heard a lot about different firms have different desires to see how much volume of content they'll receive in a package from a founder. Some want to see everything. Some want to see more concise. Some want to see a PowerPoint. Some just want to see an email. I'm assuming they want to meet and talk through things.

Susan Liu: Yeah.

Jake Aaron Villarreal: With ChatGPT and AI out there, you can craft and recraft your content very easily, very quickly in large amounts or smaller amounts. What is it that from your view you want to see when you accept that email or maybe it's got an attachment to it or maybe they're going to come in and give you something. What is it that really matters to you?

Susan Liu: Yeah. Um I would say to go from maybe email to first meeting, oftentimes I'll ask for a deck and you know again doesn't have to be long. You just want to make sure you highlight the main components of the business. So I would talk about team, right, mention the founding team, link to like the founding team's backgrounds. Talk about the market. Like of course like you want to invest in really big markets. So I would like do a little bit of market sizing analysis. Figure out how big the market is. And then I would say like two other things. One is like product wedge is very important because everybody has to start with a typically like a more narrow wedge and then like as you become bigger you earn the right to grow over time and expand that. What we as VCs do is we kind of validate that product wedge meaning like it has to be a strong wedge where you can like enter the market with that, get some initial traction, again like earn the right to kind of continue expanding within your product and your platform.

And then the last thing is traction. Some seed startups have it, some don't. It's totally okay if you don't. Um but if you are um a startup that has traction, I would definitely highlight it within the deck. So, typically like after the first um email I get and like if I'm interested, I'll usually like ask for a deck or something that has more information um and then I'll take a look and then like decide whether or not I want to take a first meeting. But I think it's always good to put a deck together anyways because um typically the first meeting is going through the deck so it's never wasted effort. Um, but I would highlight kind of like those four things I mentioned which is like, like who is the team? What does the market look like? What problem are you looking to solve with your product wedge? And then finally like if you have any traction like highlight it so we know that basically what we're looking for here is like we want to know that you can sell.

And I don't know if I mentioned this before but like I specifically look at you know I spent a decade investing but my early career is like very much looking at B2B applications. Now of course with like AI like I'm looking at co-pilots, agents etc. And so like kind of with that lens like typically like building these apps or co-pilots or agents like um it's you know the tech part is really important but like you can also kind of figure out the distribution really quick because it's not as time intensive to build out the product as like maybe like um on the infra side. And so we do want to see like a little bit of those like go to market chops which you can demonstrate to us by like getting a little bit of traction at the very start.

Jake Aaron Villarreal: Yeah, really cool, really informative. I mean, AI companies are launching every week, and it's crazy how quickly we're seeing them get into a market, build a product, and then go-to-market teams, which are being hired much faster than we've seen in the past, is pretty common today. From your perspective, looking at just AI in general, what's shocking to you in terms of what you're seeing, whether it's speed to market or growth or ARR or funding, like walk us through what you're seeing on your side on the AI front.

Susan Liu: Okay. Um so a couple of things. So with LLMs I think there's certain markets where like it is just so disruptive like legal is an example of that.

Jake Aaron Villarreal: Yeah.

Susan Liu: Where like um both law firms and in-house legal counsel like a lot of their workflow is getting disrupted by AI. Meaning like people are there like AI is making people within these departments or at law firms like much more productive which is really exciting because there's always work that like people don't want to do that they'd rather automate using AI etc. So for these markets where like um they're really ripe for AI disruption, it like blows my mind how fast these companies are growing. Like I don't think I've seen growth this like crazy in like the 10 plus years I've been investing. Like for example in these markets it's it's like decently common to like 4 or 5x in a year which I honestly just haven't seen before.

So in the past what I've seen for like traditional SaaS companies is if you go from 0 to 1 million ARR in a year that's considered really good. These days like I think, I mean the bar is much higher. Like a, you know, I would say a lot, but like there are companies that are like growing from like zero to four to five million ARR, like as you can imagine it's like 4 to 5x like faster than like ever before, which is insane to me. Um you know, and I think there's a couple reasons for this. One is like I think everyone's kind of interested in AI, but two, like some of these products like the ROI is just so clear where it's like a no-brainer that you should buy, you know, like you're making people way more productive or sometimes the cost of these things like are sometimes like the cost just makes sense where like perhaps you don't have to like make an additional hire in order to get like something done. So the the the pace of growth is much higher than I've ever seen before for industries where AI can have a very large impact.

I guess like maybe on the VC side, the other thing I've been seeing that's been kind of interesting is like there is a bit of kingmaking that's happening in certain markets and it's happening really early like maybe at the Series A or B stage where like for some reason like later stage investors just go like "Hey, like this is the company that's going to be number one," and they will just like fund them really fast and like the rounds will happen in quick succession. Like for example like they'll announce their Series A like now and then like maybe the Series B gets preempted and done within three months. I've just seen this like kind of happen a lot in markets where like again like AI has a really big impact that I haven't quite seen before and it's it kind of has interesting like uh it has an interesting impact in these industries because once one company gets a lot of funding, as you can imagine like they can just build a lot more in terms of product. And also like it just makes like their go to market machine like much more intense where they can hire a lot of sales reps, sell more aggressively etc. which also like helps them like grow at a faster clip 'cuz you just have like more people selling the product. So anyways, it's um it's definitely an interesting time on the AI front, both in terms of like the growth of companies, but also like how the market dynamics are shaking out in terms of which companies are winning in each space.

Jake Aaron Villarreal: Yeah. Yeah. It's crazy. You know, we're working with companies that have, you know, 10 employees and they're getting like $200 million in funding from major companies and they're off and running. But yeah, it is speed to market. It is hiring that go-to-market team in larger sizes and it's pretty incredible. I mean the revenue is growing. It's not totally there but we are seeing a lot of upside where we hadn't seen the pace of revenue in the past with a traditional startup. So really exciting times. You know there's lots of startups that are out there in the AI space that might be one or two people with an idea and a product and they're they might get that seed funding round earlier than expected. I want to put yourself in the founder's shoes today. If it was you going out and having a conversation with someone like yourself at a company like yours, what would your strategy be in raising that seed round today knowing what you just shared, but is there more in there that you think would be your path to go?

Susan Liu: It's a good question. I'm trying to think what else I would add to what I just said.

Jake Aaron Villarreal: Like I'll give you an example. Um, we've got, we ask these questions a lot with guests on the podcast about how did you get your funding and how much and how long did it take. And you know, some have very specific processes where you know, "I put together a list of 2,000 contacts of you know, firms from California to New York and I had this very you know process-oriented email outreach and making phone calls outreach and my network outreach and I just went through every single contact. And I showed up and I got rejected like for weeks and months and I made some changes. I just at some point decided I'm going to dress the way I am and it is what it is. I'm not going to put a suit and tie on. I'm board shorts and a shirt and you're going to get the real me 'cuz this is how it is." And all of a sudden they got two or three term sheets and kind of like the mindset shifted, the psychology shifted. Their approach was different. It was more interviewing the VC firm versus being interviewed and it kind of changed their process. Like knowing what you've seen and what you have continued to experience, what would your approach be?

Susan Liu: Yeah. Um, I think you're right in the sense that I would definitely run a real process. Meaning like I would put together a list of the top funds that I wanted to talk to, the right partners, like I mentioned like it's important to be matched with the right partner, and then either get introduced or go cold outbound to these people. Um, and the reason and I would I would do it all at the same time. Meaning like your goal I think as a founder in order to optimize your valuation, dilution, etc. is to get as many term sheets as possible because then you're in a position to negotiate. I would definitely like you know send all those emails all in one day. Try to schedule all your meetings within the next like one or two weeks. I would say ideally one. Um because there is a momentum component to it. Um like you just like there's a certain momentum that you should keep with VCs to kind of keep them um moving, um but to also kind of feel that competitive pressure so that they can give you like the best terms possible.

In addition to that like before even starting the process I would I would like do all the prep beforehand. Meaning like sometimes I feel like founders are not ready to raise because like they're so busy closing deals or whatever or like building product. I would probably take some time to like really perfect the pitch. Meaning like I would pitch your mom, your dad, whoever will listen just to like be super fluent in it because you only really get one shot and I think most VCs know within like the first 5 to 10 minutes whether it's a company they're going to spend more time on. So, you really want to have that dialed.

And in particular, like what I would in terms of like crafting the pitch, what I would do is um in my opinion, it's always best to raise when you like feel like you've hit some sort of inflection point. Whether it's like, "Oh my god, like I'm seeing like so much interest from people like they all want to buy my product or they're all signing up for my waitlist because there's something happening in the market where like they feel like they need my product," that is a good time to raise. Or like maybe like "Oh I just like like finished building out my product and like I don't know I feel like I need an additional like one or two million in order to like build out this like future set." So like whatever the inflection point is like kind of figure that out and then like I'd raise at that point.

But also like the reason why this matters is because like I mentioned earlier like VCs kind of know within like the first 5 to 10 minutes if it's a company they'll have a second meeting with. You want to put all your good stuff up front. Meaning like so much of the pitch is storytelling, but again we see like thousands of pitches a year. You want to put all the good stuff in the beginning so you can hook us soon, you know, so that we like are very engaged for the rest of the pitch. Um and that we're super excited and like thinking about like how this could be the one that kind of like you know takes us all the way.

Jake Aaron Villarreal: Yeah.

Susan Liu: To like IPO and beyond. Um so I would put like all the good stuff in the beginning and it could be anything. Meaning like it could be that you guys have um really strong founder-market fit because you've been built like you've been you know working in this space for 5 to 10 years. It could be um, "Oh like there's something shifting in the market where like the market's going to grow 2x." It could be um um, "Again we're getting a lot of market pull where you know we just started selling and already we already closed like 10 customers." Whatever, like whatever stands out for the company I would put that up front and then craft the story around it. So, in terms of pitch, like I would definitely think about that. But again, like it is I think each company has a different story, but like I would like plan out your your slides with a certain story in mind and what message you want to leave these because I feel like those end up being like the strongest pitches.

But I, you know, I would spend a lot of time like thinking through this pitch, perfecting it, etc. Because once you start through your fundraising process, you're really not going to have that much time to like refine it and change it. So, you want to make sure you're very happy with like this like this this pitch flow before you start your process. Because once you start your process, if VCs are interested, they're going to ask you a bunch of like follow-up questions. You're just not going to have time to like change anything on the pitch side, especially if it's a process that's going well because VCs are going to want to spend time with you. They'll ask their follow-up diligence questions, etc.

And then finally, I would say like, you know, hopefully like, you know, the founder will be in a good spot where like they get a lot of VC interest. And if that's the case, and I mean like that should always be the goal. Meaning like you want to get multiple term sheets because that is when you can optimize the valuation or like minimize dilution or whatever. But you just want to make sure like you kind of keep everybody like roughly at the same pace. Meaning like if you get a term sheet, like make sure you inform the other VCs that "Hey like I just got my first term sheet like where are you guys at?" So try to keep like everybody like at the same stage in terms of process so that ideally you can like evaluate multiple like term sheets at once. So, I'd say like that's probably what I would do to optimize my process and optimize like the evaluation and minimize dilution.

Jake Aaron Villarreal: Yeah. How do you know when you're getting a response that's not positive? Like you're getting the "Thanks for coming in. It was nice to meet you and you know, can you get me more information on this," but you really know it's not a real request? Like, is there some of that that happens where you know, just let me know yes or no rather than giving me an excuse and you're totally not interested. Like...

Susan Liu: Yeah.

Jake Aaron Villarreal: What should you, what signals should you be looking for there?

Susan Liu: Yeah. So, I would say generally if a VC like at the end of the meeting if the VC doesn't follow up with like, "Hey like can you send me some additional materials" or "Hey like we should book our next meeting," that's probably a sign there's less interest.

Jake Aaron Villarreal: Yeah. Okay. Pretty straightforward.

Susan Liu: Yeah. I probably wouldn't follow up and be like, "Hey, like do you want my deck?" I would ask for, I would wait for the VC to like ask for it instead.

Jake Aaron Villarreal: Okay. That's a good qualifier. I like that. You talked about like the obsessed founders profile. What specifically does that mean and what's the value of that to you?

Susan Liu: Yeah. Um, to me an obsessed founder is one that knows everything about their business. And these are my favorite types of founders because like they are just like, they are obsessed, meaning like you can tell they want to win. You can tell they're all over their business because there are founders where like they're like, "Oh like I don't know anything about the technical side. It's my like CTO's like job." Like to me like well yes you should divide and conquer, but at the same time like the best founders in my opinion who end up doing the best are the ones like that again like know everything about their business even if it's stuff that they haven't like tackled before and they're like learning fresh. If you're in a good market, they are typically very competitive because usually you're not the only one that has this great insight. This is a [laughter] great market and so you do have to like keep a step ahead of your competitors.

The one I think in my opinion like the founders who do it best are the ones who are just like they're just like obsessed with like their company, their market. The founders I think that also do really well are the ones who just like kind of like they've done their homework and their research where like they know everything about the market where I can ask them any question about like what's going on in the market, why dynamics you're seeing, and like they can, like they've got it. Like they they know the answer, they've done their homework, etc. They're like just very prepared.

Jake Aaron Villarreal: Yeah, makes total sense. How important, and I I think I know the answer to this, but like when you talk about the numbers like you understand your TAM, you understand what your pricing model looks like, the growth opportunity. For example, at Amazon, if you are on the product side you know your numbers, if you're on the financing side of course you know your numbers, if you're on the sales side you know your numbers. But like top of mind numbers should be rolling out of your mouth, like you know everything about the business. How critical is that? Is that a signal you look for when you're talking to companies pitching to you?

Susan Liu: Yes. And to me, this is a signal of their obsession. Meaning like, like for example, if you're an early stage company, like a seed stage company, every sale matters, right? So I like, in my opinion, like you should know like your ARR because like you should be like looking at which customers you're closing on a daily basis.

Jake Aaron Villarreal: Yeah.

Susan Liu: And like if you just don't have a sense of that, like part of me wonders like, "Hey, like are you, do you have your eye on the ball? Like are you actually keeping track of what matters, etc.?" So, I do think it's really important and like think about it, like what makes a business grow? Like they, you basically just have to find customers and sell the product and there's nothing, like selling the product is the ultimate indicator of product-market fit. Like if people are buying your product and they're buying it at a fast clip, like that's definitely a good sign. If you're not spending a lot in terms of like sales or marketing spend, but they're finding you somehow and like pulling the product out of your hands, also a really good sign. Also a sign of product-market fit. So, you know, the numbers are just like an indicator in terms of like, like how obsessed you are as a founder, but also like, hey, is there like true product-market fit for what you're building right now, which is ultimately what matters most, I think.

Jake Aaron Villarreal: Yeah. Talk about um how your company operates once they invest in a company. We've heard a lot of promises from some VC firms that "you can come in, we can help you recruit, we can help you build your teams, we can help you market, we can connect you to other you opportunities to drive sales." But at the end of the day, sometimes it's just writing a check and saying, "We like your product, we like your vision. Keep us posted how it goes and we'll circle back." How involved is your company with the companies you invest in?

Susan Liu: Yeah, I think every VC has different styles. So for us, each partner only invests in anywhere from like two to four companies a year. So it's not a ton. And we do that intentionally because we basically, like how our model works is that if we're investing in a company, we're typically like the lead seed investor or like a co-lead seed investor. And because we're not investing in a lot of companies, like it's really our job to make you guys ultra successful, which means like I'm generally talking to my founders, um especially at the seed stage, once every two weeks. And we like talk about anything. What's going well with the business, what's going wrong with the business, um, etc.

I think like the value that um our team provides is that like we're pretty seasoned investors, meaning like I've been doing this for 13 years, like some of my teammates have been doing it for 20 plus years, and what we have is just like kind of like that wealth of experience. Like we've seen companies go from like tiny seed stage startup to a public company or like have a multi-billion dollar like um, so we've seen a lot of companies do this before. So like when it comes to things like um figuring out you know the best game plan for go to market, like we can tell you what worked for other companies, which I think is really helpful. And then we can also help you like look around the corners because we've seen companies make stupid mistakes that like we hopefully will help you avoid because we've seen companies make these stupid mistakes. So I think that's one of the value props in terms of what we bring is like kind of the experience and like being able to work with multiple companies in the past that have had success.

In addition to that I think our network is also very strong. So network is important for a couple of things. One is like customers, right? We help you find your first couple of customers which everybody like you know thinks about after they like get the capital. In addition to that, hiring as you know is very important. Um so we have a head of talent, Audriana, who has been a head of people before but she's also been on the recruiting side. So she helps our companies think about like um the best candidates to bring on board. A lot of CEOs are first-time founders and sometimes like they haven't hired for specific departments. So, we help with that. We help you like think through like what good sales reps look like, for example, um if you're starting to think about like starting the go to market motion. So, that's something that we also assist with.

And then I would say like the last part in terms of, well I guess like there's two last things in terms of network. One is when it comes to like raising your next round of funding like your Series A, like we have, we like we've been doing this for like over 20 years. So like we have pretty good connections in terms of funds who invest the Series A, and so when we send them a company they take them, they take um our intros very seriously, which is great. Um and then the last part is while we have a lot of experience we can't answer all your questions. And so if there's a specific question we can't answer, that's when we tap into our network to kind of connect you to the right person that can help answer this question on your behalf. This is you know um this is kind of how we like tap into our network in order to help our portfolio companies. So yeah, so I think we help in those ways, but I'd say a lot of like our help is bespoke, meaning like not every company is the same. You know, every company has different challenges and so we kind of like tailor our advice and our help according to the company's needs. And we can do this because we're not investing in like 20 companies a year per partner. We're investing in just two to four.

Jake Aaron Villarreal: Yeah. How often should a company you invest in expect to be heard from you? Like you you put money into a company, do you have like weekly board meetings or monthly or quarterly, or what's that look like?

Susan Liu: Yeah. So at the early stages, at the seed stage, I usually touch base with founders once every two weeks. And then as they get bigger, then like our touch points become less frequent just because like they're at the next stage of company. I think like for a seed stage company, the hardest part is finding product-market fit. And honestly, it just takes a lot of iteration, right? Like trying things that don't work, but making a bit more progress in terms of like finding what works. And so, um, I think it's important for us to touch base often for that just so we can like throw ideas around.

Jake Aaron Villarreal: Yeah.

Susan Liu: And then like as you get bigger, then it's like a different, different set of issues where like it's not quite finding product-market fit because you've already figured that out. It's more like scaling your organization. Like for example, scaling your go to market team because like you have to like you know hit certain ARR targets for the next year and it's probably like you know 3x what you did this year, so it's like hard to do. But generally like as I approach the Series A, we probably like touch base once a month and then like we might have like quarterly board meetings or something like that.

Jake Aaron Villarreal: When do you know that you made the wrong bet?

Susan Liu: It's a good question. It's hard to tell because sometimes it takes companies longer to find product-market fit. Yeah, I know I made the wrong bet when like there is... okay, you know when you made the wrong bet when you're out of cash and you never find product-market fit. That's when you know you failed for sure. But before that, I'd say like it's kind of hard to tell because like there are companies where it just takes them a really long time to find product-market fit. And some founders are very tenacious and they just like keep at it, which is great because that's kind of what you want. They keep at it until they find product-market fit. A good example of this is Clay. I think they were like they were looking for product-market fit for seven years before they finally found it and then like exploded, you know?

Jake Aaron Villarreal: Yeah. Hope. Yeah.

Susan Liu: You only know you failed if you're out of cash. Like that's when you're like, that's when you're like dead as a business, but if you still have cash, there's still hope and you can still figure it out um as a founder. So, I would say don't give up until you're out of cash.

Jake Aaron Villarreal: Yeah. Really cool. Really insightful insights from VCs and your side of the desk that, you know, is helping the world go around. What's your view just kind of off script here of what's happening in the market when you look at big companies like OpenAI and Anthropic and Google and Oracle and all these big organizations. It's like the funds are being deployed and kind of circulating across from one company to the next and trying to figure out like is this an AI boom? Is an AI bust? Is it a bubble? Is it a air gap? Like what's going on here?

Susan Liu: Yeah. I mean, I think everybody recognizes that AI is a huge opportunity, which is why there's so much money being spent to build out foundation models, etc. Do I think we're in an AI bubble? Maybe a little bit. Meaning like um I mean the companies I like to like to back um they are for sure AI companies. I think like almost every company we're backing these days is like some sort of AI company. They could be like an AI infra company or like building an agent or whatever, but like there's typically an AI component to it. Um but I say like what's most important is just like being able to like prove real ROI. Like that's kind of the core of it.

Uh there are some companies that are just like fundraising out of promise, meaning like "Hey, we're going to build this great thing" and like maybe like they have too big ambitions and like can't quite achieve that ambition, and that like you know never looks good and like that will contribute to like the bubble quote unquote. Um but there are a lot of great companies out there who like are solving more narrow problems that like show real ROI. And I think these are like real companies, meaning like they're they're actually adding value to the customers that they're selling to.

So like for example, I have a company named IVO that does like AI legal contracting. And when before I invested in this company, I was doing diligence and talking to customers, like the customer feedback was so good. Meaning like people loved the product because contract review is something that a lot of in-house legal counsels like don't want to do. Meaning like they think it's work that's like boring and like they'd rather focus on things that are more strategic. And so would they rather outsource that to AI? Yes. Right. Um so like the value prop was really there because like they're making like these um lawyers more productive and um you know they were doing like they could like basically offload the stuff they didn't want to do anyways to AI. Um but in addition to that um because like AI was doing all this work on their behalf, there was like cost savings too because like they could do more as a smaller department which is also really powerful. So when you find companies like that where like the ROI is just super clear, like I think these companies are going to exist. They're going to, you know, there's no like AI bubble there because they're actually proving real value to their customers.

Jake Aaron Villarreal: Yeah, I actually agree with you. You know, I'm invested in some of these companies too and if there's a real problem to be solved and AI can, we like to look at the the companies that are like very narrow in terms of like they can go very deep in their space and optimize like part of an industry, like those are the ones we're interested. We're seeing a lot of success and a lot of them are bootstrapped too. They're not even funded yet. They they might need to get funding, but it's really cool to see the innovation happening and you don't have to always be in Silicon Valley to do it. It can be a product idea, right? We we like...

Susan Liu: Look, we're in the Bay Area, but like we are willing to fund companies all over. Like we don't really care where you're based. Like I think for a lot of, because I mentioned I also do a lot of vertical AI as well. Like the best, a lot of the best vertical AI companies are not based in the Bay Area. They are where their customers are, which could be like, you know, I don't know, like Atlanta or something like that. We're pretty open.

Jake Aaron Villarreal: Yeah. Really cool. Well, Susan, I want to thank you for giving your perspective and you know what it feels like on the other side when you have companies come in and pitch and present, and some are obsessed and some aren't, and what to think about if you're a founder trying to prepare for that first fund raise whether it's seed or Series A, or just the companies that are doing good for uh others in in the space that we're in in the ecosystem of the startup world. If any founders out there that has an idea or their product or they're pitching or they wanting wanting to look for funding, Susan, how do they get in touch with you or your partners? Maybe they might be a better fit. Maybe you might be the better fit, and you know how do they get in touch with Uncork?

Susan Liu: Yeah. So, the easiest, I mean the easiest way is to get a warm intro of course like I mentioned.

Jake Aaron Villarreal: There you go.

Susan Liu: So, I would probably do that if I could. If not, I'm trying to remember like I think our um pitch email is like pitches@uncorkcap.com. I will get back to you on that.

Jake Aaron Villarreal: Okay, very cool. Well, you can come through me too and I'll be the warm intro to Susan if there's any founders out there. Susan, I want to thank you so much for your time today. Very helpful. And for the listeners for listening, it means a lot to me. I'm your host Jake Villarreal signing off for now. I can't wait to catch up with you all on the next episode. Until then, Susan, the world take care. If you like what we're doing, don't forget to subscribe, leave a review on Apple Podcast or wherever you listen, and follow us on YouTube where we go behind the scenes to learn what it takes to be a startup founder.

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